EBITDA is a popular measure of cash flow, but it is not accurate, and bankers and investors who rely on it as a reliable indicator of repayment ability will be deeply disappointed. This session will explain why EBITDA does not measure cash flow and what more accurate measures are available. The session also includes several examples and a case study to illustrate why EBITDA is flawed and how to apply better cash flow tools.
Reliance on EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) as a measure of cash flow is misplaced because it presumes that borrowers will pay lenders before paying their taxes, expanding their working capital assets, and fixed assets to support sales growth, among other things. Bankers and investors who rely on it as a reliable indicator of repayment ability will overestimate available cash flow and underestimate the risk of default.
This session will explain why EBITDA does not measure cash flow and what more accurate measures are available.
Reliance on EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) as a measure of cash flow is misplaced because it presumes that borrowers will pay lenders before paying their taxes, expanding their working capital assets, and fixed assets to support sales growth, among other things. Bankers and investors who rely on it as a reliable indicator of repayment ability will overestimate available cash flow and underestimate the risk of default.
This session will explain why EBITDA does not measure cash flow and what more accurate measures are available.
Dev Strischek
A frequent speaker, instructor, advisor and writer on credit risk and commercial banking topics and issues, Martin J. "Dev" Strischek principal of Devon Risk Advisory Group based near Atlanta, Georgia. Dev advises, trains, and develops for financial organizations risk management solutions and recommendations on a range of issues and topics, e.g., credit risk management, credit culture, credit policy, credit and lending training, etc. Dev is also a member of the Financial Accounting Standards Board’s (FASB’s) Private Company Council (PCC). PCC’s purpose is to evaluate and recommend to FASB revisions to current and proposed generally accepted accounting principles (GAAP) that are …
Discover how Emotional Intelligence turns AI from a technic…
FDA Recommendations for Artificial Intelligence/Machine Lea…
Faster, Better Talent Acquisition: Leveraging AI & ChatGPT …
Sunshine Act Reporting - Clarification for Clinical Research
Cleanroom, Microbiology and Sterility Assurance Practices f…
Language is Code - Intro to AI - Generative AI - ChatGPT an…
Interactive dashboards & analytics in Excel
Medical Device Hazard analysis following ISO 14971
Data Integrity and Privacy: Compliance with 21 CFR Part 11,…
FDA Audit Best Practices - Do's and Don'ts
Performance of Root Cause Analysis, CAPA, and Effectiveness…
Unauthorized Transactions – Reg E vs Nacha Operating Rules
New Form I-9: Documents and Policies that Ensure ICE I-9 Co…
2-Hour Virtual Seminar on How to Conduct an Internal Harass…
Secrets Of Psychology - Why People Do The Things They Do
Managing Complex Projects - Project Management
Onboarding is NOT Orientation - How to Improve the New Empl…
Project Management For Administrative Professionals
Negotiating Skills For Professional Results - Winning Strat…
Utilizing HR Metrics to Illustrate & Improve Human Resource…
NEW Nacha Rule - Third-Party Sender (TPS) Roles and Respons…
FDA Technology Modernization Action Plan (TMAP) and Impact …